Big Japanese manufacturers’ confidence hits 11-year high

Abe’s ruling coalition approves plan to slash corporate taxes

Japan’s closely watched “tankan” survey, released Friday, showed confidence among large manufacturers in Japan jumped to its highest level since 2006.

The headline index for big manufacturers’ sentiment stood at +25 in December, according to Reuters, matching the high it reached more than a decade ago when the BOJ ended a previous wave of quantitative easing amid a booming economy. The index was up from +22 in September and compares to a median forecast of +24.

But large manufacturers and non-manufacturers appear for the moment to be resisting government efforts to encourage cash-rich firms to boost wages, indicating in the survey they expect business conditions to worsen in the next few months.

As if to give credence to Beijing’s warning that US tax cuts would prompt a “tax war” among developed economies, Abe’s ruling coalition approved a plan Thursday to cut corporate tax rates. The tax cuts, however, would only be for companies that increase spending.

Meanwhile, small business confidence in the US is soaring in the US, as we noted earlier this week, while the US gears up for passage of a tax overhaul. Despite anxiety surrounding last minute negotiations with Senator Marco Rubio on details of the bill, he has little political room to vote no on the bill.